MPs attacked the Press Complaints Commission last night after the regulator said there was "no new evidence" of widespread phone hacking at the News of the World.

Its report was described as a "whitewash" and there was a promise that another inquiry, from the Commons culture, media and sport select committee, would be more rigorous.

In a report published, the PCC also said it was not "materially misled" by executives at Rupert Murdoch's tabloid and that it did not believe senior managers at the paper knew reporters had illegally intercepted phone message left on mobile phones.

The paper's former royal editor, Clive Goodman, was jailed for the offence in January 2007 along with Glenn Mulcaire, a private investigator on the paper's payroll. News International has always maintained the two men were acting alone.

The PCC reopened an earlier investigation into phone hacking after the Guardian revealed in July that News International made secret payments totalling more than £1m to victims of the practice, including Gordon Taylor, chief executive of the Professional Footballers' Association, in an apparent attempt to secure their silence.

The PCC's report concluded: "The PCC has seen no new evidence to suggest that the practice of phone message tapping was undertaken by others beyond Goodman and Mulcaire or evidence that News of the World executives knew about Goodman and Mulcaire's activities."

The findings were criticised by MPs, who are conducting their own inquiry into phone hacking at the News of the World. Adam Price, a Plaid Cymru MP who sits on the select committee investigating the affair as part of a report into press standards, said: "I think it would be depressing if this PCC report was perceived by the public as a closing of the ranks within the industry."

He said: "I think the Guardian really was right to publish its story, was right to raise these questions. And I think it would be a shame if this report was in any way, shape or form interpreted as a slap across the wrists of the Guardian, which I think was raising legitimate questions."

Price added that the committee's own inquiry, which will be published next month "would be able to give a fuller picture of the context of this story".

Labour MP Paul Farrelly, another member of the select committee, described the PCC report as a "whitewash". "We are seriously concerned about the effectiveness of the PCC and self-regulation in the industry," Farrelly said . "Any whitewash thrown over these events by the regulator will only heighten concerns that will be explored in our report."

Farrelly added: "We've seen new evidence that more people at the News of the World knew about illicit and illegal phone hacking than they admitted at the time."

Lawyers who acted for Taylor also expressed dismay at the PCC's findings. Charlotte Harris, who was part of Taylor's legal team, described them as "contradictory and self-serving". Harris has also been retained by the publicist Max Clifford, who is taking legal action against the News of the World after learning that his mobile phone messages were targeted by Mulcaire.

She said: "The convenient limits that [the PCC] has set itself by only considering the evidence it deems relevant has naturally led to its conclusion that the Guardian's story was unsubstantiated."

The Guardian also criticised the PCC. "This complacent report shows that the PCC does not have the ability, the budget or the procedures to conduct its own investigations," the paper said.

"The report confirms the central allegation made by the Guardian and has not produced any independent evidence of its own to contradict a single fact in our coverage."

It added that "unlike Nick Davies", the Guardian journalist who broke the Taylor story in July, the PCC had not spoken to any of the main players in the case, adding: "If the press wants self-regulation it cannot allow external bodies to do the real work of investigation and regulation."

In a further sign that the controversy over the tactics employed by the News of the World is unlikely to go away, it emerged that a cabinet minister had been warned by police about illegal activity. The prominent politician was told that voicemail messages had been hacked into on numerous occasions.

Eminent figures in the police, the military and members of the royal household have been also been contacted by the police and warned they may also have been targeted.

It is also known that lawyers working for possible victims have been in touch with the Metropolitan police to ask it to release information about those targeted as they decide whether to take legal action against the News of the World.

The Guardian presented evidence to MPs that a junior reporter at the News of the World had been asked by an executive to transcribe tapes of phone messages supplied by Mulcaire.

The paper also revealed that a third News of the World journalist drew up a contract guaranteeing Mulcaire a bonus if he provided information that helped to substantiate a story about Taylor.

Asked how, given those facts, the PCC could conclude that no one else at the paper knew about the phone hacking, a spokesman for the commission said: "People are perfectly entitled to speculate ... but the PCC has to deal with established fact."